Section 30 of the Indian Partnership Act, 1932, talks about minors admitted to the benefit of the partnership. Before we talk about the position, status, and rights of a minor in a partnership firm, it is important to know who can be a partner.
Who can be a Partner?
With the combined effect of section 2(e) and section 3 of the Partnership Act, reference is made from section 10 of the Indian Contract Act. So, any person of sound mind, who is a major and not disqualified by law, can be a partner. In general, an agreement with a minor is void.
Related Case: Mohori Bibi vs Dharmodar Ghose: But if a contract with a minor is separable, in that case only to that extent, it will be void, not the whole contract.
If a minor is admitted into a contract for benefits, then such a contract is enforceable.
1. Minor may not be a partner in the firm but may be admitted to the firm for the benefits of the partnership (with the consent of all the partners).
2. Minor can have a share in the property and of the profits of the firm. He may also have access to the accounts of the firm.
3. Minor’s share is liable for the acts of the firm (section 2a), but liability shall not be personal. [not the unlimited liability like that of partners (section 25 of the Partnership Act, 1932)]
4. Minor may not sue the partners for account or payment of his share of the property but only when he severs (detach, cut off, separate) connection with the firm.
Provided that in the same case, all the partners consented or a partner entitled to do may elect to dissolve the firm by giving notice. The court will proceed with the settling of accounts as well as for the dissolution of the firm.
5. Doctrine of Election: Within six months of attaining majority or attaining knowledge that he had been admitted to the benefits of a partnership (whichever date is later). Minor turned major has to give notice that he has elected to become a partner or not. The notice will only determine his position. If he fails to give notice of his election not to become a partner, he shall become a partner after the expiry of six months.
6. Burden of Proof: After the expiry of six months, the BOP of the fact that the minor was not knowing about the election is upon the minor itself.
7. When such person elects to become a partner:
a. The minor’s liability becomes unlimited from the date he has admitted for the benefits of the partnership. (retrospective)
b. His share in the property would be equivalent to the portion for which he was entitled as a minor.
8. When such person elects not to become a partner:
a. His liability would continue as those of minor until he gives public notice.
b. His share shall not be liable for any acts subsequent after the day of notice.
c. He is entitled to sue the partners for his share.
9. If the minor, in the meantime of six months, represents himself as a partner in the firm and make-believe to the third party of the same, then section 28 of the Partnership Act will apply.
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